Williams sells assets to partnership for $2.4B

TULSA, Okla. -- Williams Cos. Inc. said Wednesday it has agreed to sell an 83 percent stake in an olefins production facility and other assets to its business segment, Williams Partners LP, for $2.36 billion.

Williams Partners also will acquire Williams' refinery-grade propylene splitter and pipelines in the Gulf region.

The partnership said that it expects the olefins production facility in Geismar, La., to give more certainty to cash flows, noting that it expects the ethane market to go through periods of volatility. It also predicted that the new plant would add to distributable cash flow for the partnership's unit holders.

The partnership plans to fund the acquisition by issuing Williams 42.8 million limited-partner units in the partnership, $25 million in cash and an increase to the general partner's capital account to maintain Williams' 2 percent general-partner interest.

The partnership agreed to temporarily waive about $16 million per quarter of general partner incentive distribution rights until the end of 2013, or 30 days after an expansion of the plant at Geismar is operational.

Under terms of the agreement, Williams Partners will be responsible to complete the plant's expansion, which is expected to cost $270 million plus an additional $160 million for pipelines. Currently, the plant produces about 1.3 billion pounds of ethylene, a refining byproduct used to make chemicals, and 90 million pounds of polymer grade propylene, a refining by-product used to make plastics.

The sale is expected to close in early November.

Williams, which is based in Tulsa, Okla., owns 66 percent of Williams Partners, including the general partner interest. Once the transaction closes, Williams' stake will increase to 70 percent.

Shares of Williams Cos. rose 17 cents to finish at $34.99 and fell 14 cents in after-hours trading. Williams Partners rose 20 cents to end at $52.98.